The European Commission has introduced the Competitiveness Compass, a strategic roadmap aimed at strengthening the EU’s global competitiveness by fostering innovation, green industry, and economic security.
This initiative, the first major policy move of the current mandate, seeks to position Europe as a leader in emerging technologies, sustainable industries, and resilient trade partnerships while accelerating the transition to a net-zero economy.
Europe has struggled to keep pace with other major economies due to slow productivity growth and structural barriers. The Competitiveness Compass aims to address these challenges by closing the innovation gap, lowering energy costs, and strengthening supply chains.
European Commission President Ursula von der Leyen said, “Europe has everything it needs to succeed in the race to the top. But we must fix our weaknesses to regain competitiveness. The Competitiveness Compass transforms the excellent recommendations of the Draghi Report into a roadmap. Now we have a plan, we have the political will. What matters is speed and unity. The world is not waiting for us.”
The Competitiveness Compass translates the key findings of the Draghi Report into actionable policies across three core areas.
The first priority is closing the innovation gap. To establish Europe as a global innovation hub, the EU aims to lead in advanced fields such as artificial intelligence, quantum computing, biotechnology, robotics, and deep technologies. Key measures to achieve this include the launch of ‘AI Gigafactories’ and ‘Apply AI’ initiatives aimed at boosting AI adoption in industry. The EU is also developing action plans for advanced materials, space technologies, and biotech sectors. Furthermore, the EU Start-up and Scale-up Strategy is designed to help new businesses grow across borders, while a new ‘28th legal regime’ seeks to standardise corporate laws, simplifying cross-border expansion for innovative companies.
The second focus area is green industry and energy transition. With high and volatile energy costs posing a major challenge, the Competitiveness Compass underscores the need to lower costs while advancing industrial decarbonisation. The upcoming Clean Industrial Deal aims to position the EU as a top location for green manufacturing, alongside an Affordable Energy Action Plan to lower energy costs for businesses. Additionally, the Industrial Decarbonisation Accelerator Act will expedite clean energy projects, and sector-specific action plans will ensure competitiveness for essential industries like steel, metals, and chemicals during the green transition.
The third pillar is strengthening economic security. As global trade disruptions become more frequent, the EU seeks to reduce supply chain risks by diversifying partnerships and securing access to critical raw materials, clean energy, and advanced technologies. Key initiatives include the establishment of new Clean Trade and Investment Partnerships to secure essential resources and the introduction of a European preference policy in public procurement for critical sectors. Expanding the EU’s network of free trade agreements, already covering 76 countries, further supports these goals.
In addition to these core areas, the Competitiveness Compass introduces five cross-sector enablers critical for long-term economic resilience and growth. First is cutting red tape and simplifying regulations, targeting a 25% reduction in administrative burdens for firms and 35% for SMEs, alongside faster access to EU funding. The second is strengthening the Single Market through a Horizontal Single Market Strategy, aimed at eliminating intra-EU trade barriers and accelerating standard-setting processes, especially benefiting SMEs.
The third enabler focuses on unlocking investment and capital flows, with the creation of a European Savings and Investments Union to channel private capital into high-growth sectors and a refocused EU budget aligning financing with competitiveness priorities. Fourth is workforce development and job creation, driven by a Union of Skills initiative promoting lifelong learning, talent retention, and fair mobility, with improved recognition of training qualifications across Member States. The fifth enabler involves better aligning national and EU policies for growth, with the Competitiveness Coordination Tool harmonising policy implementation and a new Competitiveness Fund consolidating multiple EU financial instruments.
Looking ahead, legislative proposals for these key initiatives will be presented in the coming months, with EU leaders set to discuss their implementation at the next European Council Summit. As global competition intensifies, the Competitiveness Compass lays out a clear roadmap for Europe’s economic future. However, the success of this ambitious agenda will depend on swift implementation and coordinated action among EU institutions, national governments, and the business sector.
